Insurance businesses are rethinking their strategies and the way that they undertake business, as 55% of senior executives working in the sector say that over the last 1-2 years, they have experienced increased pressure on ESG matters from stakeholders such as regulators, customers and employees, in comparison to 46% across all sectors, according to a survey by DWF.

The survey, of 480 senior executives in 13 countries, shows that 28% of the insurance executives felt that the ESG performance of their own company was “weak”. Some 65% of insurance leaders also said that poor ESG performance is affecting their company a great deal, in comparison to an average of 59% of executives across all companies surveyed. There is a desire to change, whilst recognising it will be challenging.

The figures also highlight the growing importance that employees place on working for a responsible and sustainable employer. 42% of insurance companies across the world said that they found recruiting key talent difficult because their ESG policies are seen as “weak”, in comparison to 40% of all companies.

Kirsty Rogers, Global Head of  ESG at DWF, said: “The clear message from our survey is that companies not only understand the need to have a strategy for ESG, but that without one there are clear long term risks and liabilities. These costs could include damage done to their business to the point of affecting their licence to operate. Whilst there is a cost to transitioning to a more sustainable business, it is a necessary investment for people, the planet and ultimately profit.

“It is clearer than ever that businesses have a huge role in driving the global transition, while also improving social issues and driving progress on governance, and insurance companies understand this. To achieve their goals, they need a clear, ambitious and transparent ESG strategy.”

On the legal front, only 30% of insurance sector executives said that they have fully considered the ethical and legal implications relating to ESG disclosure and commitments, whereas across all sector, the figure was slightly higher at 35%.

Claire Bowler, Head of the Insurance sector at DWF, added: “There is increasing pressure on insurance companies to meet market expectations and subsequently stakeholders are often requesting ESG information from their suppliers. There has been a huge spotlight on insurance over the last 24 months compared to other sectors and it has unfortunately resulted in companies losing business as a result. Insurance companies know they need to catch up and there is increased and necessary engagement from Board level right across organisations.”

Ben Howarth, Manager, Climate Change and Open Data Policy at The Association of British Insurers, said: “The Insurance and Long-term Savings sector has a crucial role to play in both helping society adapt to the impact of climate change and supporting the transition to Net Zero as both underwriters and major international investors. The ABI’s Climate Change Roadmap sets out the commitments firms are already making and shows how our sector can play a leadership role across the wider economy.

“This important research from DWF highlights why including colleagues from across the organisation as firms develop their strategies on Climate Change and ESG is so vital. The ABI and its members are committed to working with industry peers, Government and regulators to ensure the industry’s approach extends beyond regulatory compliance to pro-actively supporting innovative approaches to climate risk management and this research highlights a number of areas that this work will need to prioritise.”